Residential property buyers [What Europe does for you]

With European elections coming up in May 2019, you probably want to know how the European Union impacts your daily life, before you think about voting. In the latest in a series of posts on what Europe does for you, your family, your business and your wellbeing, we look at what Europe does for residential property buyers.

Many if not most Europeans looking to purchase their first apartment, or thinking of buying a bigger apartment or house to fit a growing family, take out mortgages for the purpose. Under these contracts, the purchased property secures the mortgage and, should repayment obligations not be fulfilled, allows the loan provider (usually a bank) to seize the property and sell it to pay off the loan. Taking out a mortgage loan is therefore a very important financial decision, entailing a financial commitment that can last for decades and carrying risks for both the buyer and the bank.

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The Mortgage Credit Directive is designed to ensure that anyone taking out a mortgage to purchase a property is adequately informed and protected against the risks. The directive applies to all loans made to consumers in order to buy residential property.

The directive states that lenders are required to provide consumers with clear and detailed information on loan conditions, as well as to assess their creditworthiness according to common EU standards. Furthermore it sets out common quality standards and business conduct principles for all EU lenders and establishes the right to repay credit earlier than determined in a contract. Last but not least, it sets up an EU ‘passport’ scheme that allows banks that are authorised to operate in one EU country, to deliver services across the whole EU, thus offering consumers a far greater choice than what they would normally find nationally.

Further information

• Mortgage credit – Directive 2014/17/EU, https://ec.europa.eu/info/law/mortgage-credit-directive-2014-17-eu_en
• Buying residential property – rules on loans, http://eur-lex.europa.eu/legal-content/EN/LSU/?uri=CELEX:32014L0017
• Your Europe: your rights – mortgage loans, https://europa.eu/youreurope/citizens/consumers/financial-products-and-services/mortgages/index_en.htm
• EPRS | European Parliamentary Research Service: www.epthinktank.eu